Banks accept 99-year leases

FARMERS armed with 99-year leases can now access loans to finance farming upon meeting conditions set by the banks, ending years of a bitter row between Government and bankers over the bankability of the leases.

The Bankers’ Association of Zimbabwe said financial institutions were committed to supporting the agriculture sector but would assist only those with viable farming projects and valuable infrastructure.

Those who are eligible for the loans include farmers who own houses, sheds and mounted irrigation equipment. Farm addresses are taken as proof of residence at account opening.

“Banks have agreed that farmers should get loans as long as they are stable and meet the required conditions. These banks can hold both moveable and immoveable property as collateral for loans,” said BAZ in a statement.

BAZ, however, warned that a 99-year leases did not guarantee a farmer access to bank loans.

“Banks are looking at various other risk factors in assessing whether a farming business meets the minimum criteria. The farming enterprise must be viable in accordance with the assessment criteria set by the lending bank,” said BAZ.

A banker told The Sunday Mail recently that no farmer with a 99year lease has been turned down by any financial institution.

“If any bank has a problem with the lease, the association would be keen to know the bank and branch. Leases are legal documents and the Lands Ministry appreciates that banks have to do due diligence before giving out loans,” said the banker who preferred anonymity.

Lands and Rural Resettlement Minister Dr Douglas Mombeshora said: “As I have always said, we completed work on the 99-year leases. The amendments were on the advice of bankers. As we speak, there are a couple of A2 farmers who have already obtained the 99-year leases which function as the title document for the farmer to acquire a loan.”

He said no farmer has been turned away by any bank because financial institutions agreed that the leases were a legal document.

Minister Mombeshora urged farmers to report any cases of banks rejecting 99-year leases. He explained that banks could not give loans without following due procedure which satisfied the set requirements for one to qualify for financing.

Zimbabwe Commercial Farmers Union (ZCFU) president Mr Wonder Chabikwa said while the move by banks was a positive development, banks should review interest rates downwards.

“We hope the 99-year leases will work so they benefit farmers who have been denied access to finance for many years. It will be a new chapter for farmers. However, my worry is on interest rates which are still too high. The current 12 percent interest rate is exorbitant and we recommend a range between 5 and 8 percent, so farmers can be able to repay the loans,” he said.

The Lands and Resettlement Ministry said farmers seeking 99-year leases apply from lands district offices where verification, including field visits, are done. Recommendations will then be sent to the lands provincial office for further scrutiny.

From the province, the application is forwarded to the national office for consideration by the Land Commission Board before being sent to the Minister of Lands and Resettlement.

The minister and his lands legal team then sends the documents to the Attorney-General’s Office, which is the State conveyance agent.

The documents will then be forwarded to the Deeds Registry Office for further due diligence particularly on farm boundaries.

After the Deeds Office process, two copies of the 99-year lease are released to the farmer and the other to the Lands Ministry.